tacn3 unit 5: foreign exchange market

1. Foreign exchange market

currencies are bought n sold + currency prices are determined

2. Currency hedging (bao hiem rui ro)

insurance against potential losses because of changes in exchange rate

3. Currency arbitrage

instantaneous purchase n sale of a currency in diff markets for profit. mua tiền tệ ở thị trường có giá thấp và bán lại ở thị trường có giá cao hơn mà không có rủi ro tỷ giá đáng kể.

4. Currency speculation

purchase n sale of currency with expectation that it will change n generate profit

5. Quoted currency

the currency with which another currency is to be purchased (đồng tiền được định giá dựa trên một đơn vị của đồng tiền cơ sở.)

6. Base currency

the currency that is purchased with another currency (dong tien co so)

7. Spot rate

the exchange rate that require delivery of the traded currency within 2 business days

8. Forward rate

the exchange rate at which 2 parties agree to exchange currencies on a specified future date

9. Forward contract

require the exchange of an agreed-upon amount of currency on a agreed-upon date

10. Currency swap

simultaneous purchase n sale of foreign exchange for 2 diff dates

11. Convertible currency/hard currency

trades freely in the foreign exchange market + price determined by law of supply n demand

12. Gold standard

an international monetary systems which nations linked value of paper currency to value of gold

13. Fixed exchange rate system

exchange rate is fixed by international agreement

14. Bretton Woods agreement

an accord among nations to create a new international mone system based on US dollars

15. World Bank

agency created by Bretton Woods to provide funding for national econ deve efforts

16. IMF

agency created by Bretton Woods to regulate fixed exchange rates n enforce the rules

17. Managed float system

gov intervene to stabilize currencies that float against one another

18. Free float system

gov don’t intervene to stabilize currencies that float freely against one another

19. Buy rate

the rate which the bank will buy a currency

20. Ask rate

the rate which the bank will sell a currency

21. Currency option

the right to exchange a certain amount of currency on a specific date at a specific rate